Hutchison Whampoa, the investment flagship of billionaire Li Ka-Shing, posted a 78 per cent year-on-year drop in net profit to HK$10.2 billion in the six months ended June - but its core earnings were better than expected.

The core earnings of the port-to-telecoms conglomerate rose 13 per cent year-on-year to HK$9.8 billion in the period, outperforming the 5 per cent growth forecast by analysts.

The like-to-like comparison was made by stripping off the HK$37.2 billion in disposal gains, mainly due to the spinning off of its mainland ports in the same period last year.

Li, the chairman of Hutchison, said the company's four core businesses could weather the uncertainty in the global economy, even though one third of its core earnings were generated from Europe in the first half.

'Even the retail business could be alright [while] the infrastructure business will grow in the next five years,' Li said. But he added that the financial problems stemming from the crisis in the euro zone would take some time to solve.

Sales at the company rose 6 per cent to HK$ 195.0 billion.

Interim dividends remained at 55 HK cents per share.

The telecoms division, a consistent problem within Hutchison, has continued to show improvement in earnings.

Hutchison's Hong Kong and Macau telecoms division, which has over 3.6 million users in total, saw earnings before interest, tax, depreciation and amortisation (EBITDA) increase 17 per cent to HK$1.45 billion.

The contribution from the 50-50 joint venture Vodafone Hutchison Australia fell 21 per cent to HK$868 million. Three Group Europe, including the operations in Britain, Austria and Italy, saw its EBITDA increase 4 per cent to HK$4.1 billon.

Telecoms operations in Asia, which has 37.2 million users in Indonesia, Vietnam and Sri Lanka, reported HK$47 million in losses, narrower than the HK$543 million losses a year earlier.

Its port portfolio across the globe saw container throughput increase 2 per cent year-on-year, while the terminals in Europe accounted for 20 per cent of the total throughput.

But net earnings at its energy business in Canada, Husky Energy, dropped 21 per cent to C$1.02 billion (HK$7.88 billion). That was partly because of the higher base from a one-off disposal gain in the same period last year. The temporary shutdown of its offshore oil rigs for maintenance also led to a 3 per cent decline in production.

Hutchison has transformed itself into a company with stable income by increasing its investment in infrastructure projects, rather than amassing huge disposal gains from mega deals.

Cheung Kong Infrastructure, which is 80 per cent owned by Hutchison, posted an 18 per cent increase in earnings to HK$4.7 billion in the first six months, owing to the contribution from a British water company it acquired. The infrastructure company last month bought Wales & West Utilities for ?45 million.

Shares in Hutchison dipped 1.15 per cent to HK$68.65 yesterday.

'After the 3G turnaround, Hutchison has transformed into a company with stable earnings,' a Morgan Stanley report dated July 25 said. 'But at the current price without corporate activity, it could remain range-bound.' The securities firm rated its target price at HK$75.

But CLSA noted that Hutchison's share price lagged behind its projected net asset value by about 30 per cent. In a report on July 31, CLSA put Hutchison's target price at HK$94.

17%

EBITDA at Hutchison's Hong Kong and Macau telecoms unit rose this much to HK$1.45 billion